Grubhub Slides After Analysts Question Sustainability of Trends

Grubhub shares fell as much as 8.8% on Thursday, after the company reported its first-quarter results and withdrew its full-year outlook, citing uncertainty related to the pandemic.

Analysts saw elements to like in the results, which also included some color about second-quarter trends that were seen as strong. “This crisis has accelerated the adoption of online ordering by both consumers and restaurants,” executives said. Grubhub also said it had added more new restaurants in April and May than it did in all of last year’s second half.

Despite such positive signs, Gordon Haskett warned that these trends were unlikely to persist.

Here’s what analysts are saying about the results:

Gordon Haskett Research Advisors, Robert Mollins

This was an “impressive start” to the quarter, but “we don’t expect trends to hold.”

The second-quarter Ebitda outlook “more than likely doesn’t account for the growing number of cities imposing commission fee caps.”

Hold, $37 price target

William Blair, Ralph Schackart

Despite a “rocky end to March,” this was a solid quarter, and so far, trends point to “strong demand improvement” in the second quarter. There has been “an influx of new diners and restaurants to the platform, higher average order sizes, increased tips for drivers, and high activity rates for all diners.”

Jefferies, Brent Thill

“Early 2Q color is encouraging,” given signs of healthy demand.

“Industry consolidation is inevitable, but likely on hold given the current dynamic.”

Hold, price target $50 from $48

Stifel, John Egbert

Assuming New York City “returns to normal and ordering behavior in other cities does not evaporate as people go back to work, Grubhub could be poised for higher levels of 2020 [gross food sales] growth than the Street is modeling.”